Kyle Kashuba's Redwater Analysis on The Lawyer's Daily

The Lawyer’s Daily has featured Kyle Kashuba’s comprehensive analysis on the Redwater appeal, a significant ruling with implications not just for players in the oil and gas sector but for insolvency law in Alberta generally.

The article, published on The Lawyer’s Daily on September 13, updates Kyle’s breakdown on the significant ruling handed down earlier this year from the Alberta Court of Appeal (ACA) regarding how Redwater, a small oil and gas company, should have its assets—including non-producing abandoned wells—addressed in insolvency.

The joint appeal of the Alberta Energy Regulator (AER) and the Orphan Wells Association argued that when a company goes into receivership, priority over assets should go to the AER in order to clean up abandoned wells. The ACA’s decision confirmed, however, that creditors are permitted to “renounce uneconomic assets, such as abandoned oil wells, in the receivership process.”

With respect to the AER’s argument that the chambers judge’s decision “may encourage further receiverships and bankruptcies as a means of avoiding end of life obligations and poses a risk of a significant increase in the number of orphaned AER licensed assets,” Justice Slatter held that these fears are exaggerated, as bankruptcy is not an easy solution to financial problems. Further, policy concerns cannot outweigh the proper interpretation of a statute.